Objectives of Risk Mitigation and Planning

The objectives of risk mitigation and planning are to explore risk response strategies for the high risk items identified in the qualitative and quantitative risk analysis. The process identifies and assigns parties to take responsibility for each risk response. It ensures that each risk requiring a response has an owner. The owner of the risk could be an agency planner, engineer, or construction manager, depending on the point in project development, or it could be a private sector contractor or partner, depending on the contracting method and risk allocation.

Risk mitigation and planning efforts may require that agencies set policies, procedures, goals, and responsibility standards. Formalizing risk mitigation and planning throughout a highway agency will help establish a risk culture that should result in better cost management from planning through construction and better allocation of project risks that align teams with customer-oriented performance goals.

Once the agency planner, engineers, and construction managers have thoroughly analyzed the critical set of risks, they are in a better position to determine the best course of action to mitigate those risks. Pennock and Haimes of the Center for Risk Management of Engineering Systems state that three key questions can be posed for risk mitigation.
What can be done and what options are available?
What are the trade offs in terms of all costs, benefits, and risks among the available options?
What are the impacts of current decisions on future options?

An understanding of these three questions is critical to risk mitigation and risk management planning. Question 1 addresses the available risk response options, which are presented in the following section. An understanding of questions 2 and 3 is necessary for risk planning because they determine the impact of both the immediate mitigation decisions and the flexibility of risk mitigation and planning on future events.

What is Risk Mitigation and who will involve in Risk mitigation plan

Risk Mitigation is nothing but ensuring the smooth
functioning of day to day business and making it sure that
the process is completed by sticking to quality and
compliance.This naturally eliminates much of the system
error and human mistakes.If at all a mistake is committed
it has to be rectified before it could hurt the business.

Ideally there is an individual or group of individuals who
have vast experience of the process and are well aware
about the human mistakes, system error and manipulations
that could hurt the process. They are also capable of
identifying mistakes error and possible manipulations.


Further Risk Mitigation involves identifying the grey areas
and eliminating them out of the process.This ensures that
the same error dont happen in the future.

Risks and Mitigation

Any risks that will affect the testing process must be
listed along with the mitigation. By documenting the risks
in this document, we can anticipate the occurrence of it
well ahead of time and then we can pro actively prevent it
from occurring. Sample risks are dependency of completion
of coding, which is done by sub-contractors, capability of
testing tools etc.

Exchange Rate Risk

The uncertainty of returns for investors that acquire foreign investments and wish to convert them back to their home currency. This is particularly important for investors that have a large amount of over-seas investment and wish to sell and convert their profit to their home currency. If exchange rate risk is high - even though a substantial profit may have been made overseas, the value of the home currency may be less than the overseas currency and may erode a significant amount of the investments earnings. That is, the more volatile an exchange rate between the home and investment currency, the greater the risk of differing currency value eroding the investments value.

Market Risk

The price fluctuations or volatility increases and decreases in the day-to-day market. This type of risk mainly applies to both stocks and options and tends to perform well in a bull (increasing) market and poorly in a bear (decreasing) market. Generally with stock market risks, the more volatility within the market, the more probability there is that your investment will increase or decrease.

Country Risk

This is also termed political risk, because it is the risk of investing funds in another country whereby a major change in the political or economic environment could occur. This could devalue your investment and reduce its overall return. This type of risk is usually restricted to emerging or developing countries that do not have stable economic or political arenas.

Financial Risk

Financial risk is the risk borne by equity holders (refer Shares section) due to a firms use of debt. If the company raises capital by borrowing money, it must pay back this money at some future date plus the financing charges (interest etc charged for borrowing the money). This increases the degree of uncertainty about the company because it must have enough income to pay back this amount at some time in the future.

Liquidity Risk

The uncertainty introduced by the secondary market for a company to meet its future short term financial obligations. When an investor purchases a security, they expect that at some future period they will be able to sell this security at a profit and redeem this value as cash for consumption - this is the liquidity of an investment, its ability to be redeemable for cash at a future date. Generally, as we move up the asset allocation table - the liquidity risk of an investment increases.

Business Risk

The uncertainty of income caused by the nature of a companies business measured by a ratio of operating earnings (income flows of the firm). This means that the less certain you are about the income flows of a firm, the less certain the income will flow back to you as an investor. The sources of business risk mainly arises from a companies products/services, ownership support, industry environment, market position, management quality etc. An example of business risk could include a rubbish company that typically would experience stable income and growth over time and would have a low business risk compared to a steel company whereby sales and earnings fluctuate according to need for steel products and typically would have a higher business risk.

The Objectives, Extent, and Scope of Audit Procedures

Audit procedures are called audit programs by examiners, and they merely serve as guidelines and checklists of actions to perform during audit engagements. To provide an example, we focused on the details of the audit procedures for accounts receivables (AR), which we present in the succeeding sections.

In actual practice, audit techniques or styles in performing these procedures, developed by examiners through their skills and expertise, contribute largely to achieving the best audit results within a specified time frame.

The objectives, the extent, and the scope by which these procedures are performed may vary according to the role of the examiner, as internal or external auditor. These roles and objectives are discussed in full in a separate article entitled Financial Statement Audit vs. Forensic Accounting.

The term “extent” refers to the percentage of documents test-checked for completeness or for accuracy of computations involved. An AR audit program may also include the tracing of transactions from the selling point, to payment activities, up to its final disposition as a paid-account, a past due account, a doubtful account, or as a bad debt, as they are verified via random sampling of substantial balances or material amounts.

The term “scope” refers to the period covered based on cut-off dates established by the internal or external financial auditors. To fraud examiners or forensic accountants, the scope refers to the specific account(s) under suspicions of fraud--where dates could go as far back as necessary.